IMPORTANT INFORMATION FOR PRIVATE INVESTORS

Our investments place your capital at risk. We do not provide investment, tax or legal advice and we recommend you seek professional advice if you are considering investing with us. You may lose part or all of the amount you invest with us. We invest in unquoted shares in small companies. The value of these shares can be volatile, and the shares are often difficult to sell. The tax reliefs associated with our investments depend on the individual circumstances of each investor and may be subject to change. Past performance is not a reliable indicator of future results. Our forecasts and performance targets cannot accurately predict how investments will perform.

The time is now.

Investing in EIS towards the end of the tax year has become quite normal for advisers looking to reap the benefits of the tax reliefs for their clients. But the reality is that the timelines involved with EIS investing, mean that, if you’re looking for income tax relief against the full investment amount in the current year, you need to be investing as soon as possible.

It’s common for full deployment to take between 12 to 18 months and the EIS reliefs, not to mention the EIS qualification clock, aren’t triggered until the funds are used to acquire shares in each investee company. So, to be clear, the transfer of the investment amount to the EIS fund manager is not the important date. It’s the date of share purchase that is.

There are great deals to be done in EIS, but finding the real winners is no easy task. There are literally thousands of potential investees and identifying those with the best chance of success requires specialised and sometimes time-consuming filtering and due diligence.

Oxford Capital Deal Flow Funnel

The typical timeframe from introduction of the opportunity to completing the deal is three to six months because protecting a client’s interests does take time. Both legal work and advance assurance – HMRC’s stamp of approval that the company meets the criteria to qualify for EIS at the outset, can substantially extend the time taken to finalise a deal but both are essential elements of the due diligence process.

While HMRC now targets a 15-day turnaround to provide a yes or no to an advance assurance application and earlier this year we did indeed have an advance assurance application approved in 15 days. However, where there are complicated or unusual features within a company structure (generally not close to the boundaries of EIS qualification in terms of the growth and risk factors), our experience is that it can still take two months or more.

So, there is a balance to be struck. On one side, it’s important to deploy investors funds as quickly as possible to start the EIS clock, make the reliefs available and to offset cash drag. On the other, proper research to uncover the companies with the best potential for rapid growth is crucial, as is diversification so that great successes can compensate for expected failures.

This balance is affected by the amount of funds available to invest and, at Oxford Capital, by the risk profile of the deal, although our fundraising is kept under review with the goal of balancing funds raised with our capacity to deploy them. To ensure effective diversification, our policy is to invest each subscription into between 12 and 15 companies. Where the deal is early stage, we may decide to allocate just 5% of an investor’s subscription into the company, with the maximum generally at around 10% – 15%.

After deployment, the process for applying for and receiving EIS certificates from HMRC takes time. This can account for about two months on average. Since it is the EIS3 certificate that allows an investor to actually claim the EIS tax reliefs, this should also be taken into account.

The opportunities in EIS are potentially hugely rewarding. The tax reliefs remain generous too, but understanding the deal-flow and deployment timelines is key to making the best use of them.

For more information about the exciting opportunities available through the Oxford Capital Growth EIS, click here.

OXFORD OFFICE

The investments referred to on this website will place your capital at risk. Oxford Capital Partners LLP’s products and funds invest in unlisted companies which are likely to be harder to value and sell than quoted shares. Please note that tax reliefs are dependent on investors’ individual circumstance and are subject to change. Where reference is made to past or future performance this should not be taken as a reliable indicator of future results. Oxford Capital Partners LLP does not provide advice and the information on this website should not be construed as such. Investors should seek advice from a regulated adviser.

At Oxford Capital we have quickly adjusted to the ‘new normal’ of working within the restrictions of Covid-19. All of our team are working effectively from home, and our operations are carrying on as normal. The health and wellbeing of our colleagues and their loved ones remains paramount and we are focused not only on maintaining business as usual but on keeping morale high in an environment of much less social interaction. We recently welcomed our first remote new hire and our team has rallied in supporting her induction. We recognise the challenges of juggling home and work life at the moment, and are touched by the positive attitude and adaptability with which everyone has responded. The technology of Teams, Skype and Zoom has become routine for daily interactions both inside and outside the firm, and we are communicating with clients, founders and business partners as usual. We have also enjoyed getting to know better the children, partners and pets of our colleagues and friends, bringing moments of laughter, joy and humanity.

Clients’ investments are being managed as normal by our investment team. We continue to attend portfolio board meetings and other meetings as usual, albeit remotely. Many of the usual business events and conferences that we are used to participating in are being hosted online and we participate and contribute as normally as we can.

It is important during times of such uncertainty to remember that investing in small private companies is a long-term activity. We seek to guide and support our founders and portfolio companies through their respective challenges, drawing on our own experience of past crises and on good teamwork. Following an intense period of working with our portfolio companies to assess the impact of Covid-19, we have supported action where required to take early measures to reduce costs and extend cash runways. Much of our thinking is now turned to the positioning of companies for long term opportunities as the market takes a leap forwards in accelerating digital transformation in many sectors of the economy, often building on trends that pre-existed the crisis. Many of the companies in the portfolio have demonstrated their commitment to social responsibility by supporting the NHS and key workers, governments and supporting their own staff and families. We support these efforts simply as they are the right thing to do.

At Oxford Capital we continue as normal whilst anticipating the next “new normal”. No employees have been furloughed. We are fortunate to work in a business which is willing to help others. We do our best to support each other and our loved ones, just as we endeavour to support our investee companies. We salute Captain Tom for his extraordinary fund raising efforts. We also recognise the efforts of our portfolio companies and so many entrepreneurs as they navigate the Covid-19 challenges. We hope that these efforts will contribute to the success of our nation’s economic revival and to value for our investor-clients.